With its low-cost entry and rapid growth, setting up a dropshipping business is an increasingly common means of entering Thailand’s thriving e-commerce industry. In this guide, we’ll walk you through the essential steps to launch a dropshipping business in Thailand, help you navigate core licensing needs, and adhere to key regulatory requirements.
Overview of the Dropshipping Industry in Thailand
Why is Dropshipping A Popular E-commerce Business Model?
Dropshipping is a retail model where sellers do not keep products in stock but instead fulfill their orders through third-party suppliers. This eliminates the need for inventory management and allows low-cost entry into the e-commerce business.
The Thai government offers a supportive environment for digital and e-commerce businesses with its digitized and streamlined e-government registration processes, allowing business owners to apply and register for necessary licenses through online government platforms.
Additionally, there’s the Digital Thailand Plan which aims to transform Thailand into a digital economy hub. The project focuses on upgrading Thailand’s digital infrastructure and promoting digital innovation while enhancing cybersecurity measures.
Depending on the exact scope of your operations, you may also qualify for Board of Investment (BOI) promotion. Eligible companies that operate within one of the BOI’s targeted industries and apply for promotion can benefit from fewer restrictions regarding hiring foreign workers, land ownership, and tax incentives, as well as up to 100% foreign ownership rights.
How to Implement Dropshipping in Thailand
Thailand’s E-commerce market is increasingly competitive. Thus, to successfully set up and manage a dropshipping business in Thailand, we recommend that you implement the following best practices to ensure compliance with E-commerce regulations and provide your customers with an efficient dropshipping service:
- Register A Suitable Legal Entity: The most common legal entity for e-commerce operations in Thailand is a Limited Liability Company (LLC). This structure provides up to 49% foreign ownership with the option to modify preferential and regular shares to preserve foreign control.
- Find A Reliable Supplier: Locate a local supplier that can ship directly to customers. Emerhub can help you secure one for your operations if you do not have a supplier.
- Set Up An Online Store: A website or e-commerce platform should be set up in compliance with Thai e-commerce regulations and clear return policies.
- Process the Order and Payments: Integrating payment gateways can facilitate smooth transactions and allow your business to gain consumer trust. After customers make their payment, the order should be relayed to the supplier to be fulfilled and shipped out.
- Providing Quality Customer Service: In case of any complaints or inquiries, adding a helpdesk function to your website will be beneficial for immediate customer service.
Emerhub can help you navigate the company setup for your dropshipping business in Thailand. Our local experts are well-versed in the local digital market and can therefore provide key insights for implementing the necessary resources for your e-commerce venture. To learn more, take a look at our related guide on how to start an e-commerce business in Thailand.
Mandatory Licenses for E-Commerce and Dropshipping in Thailand
Before you can start operating a dropshipping business in Thailand, you must secure several industry-specific licenses. Additionally, you may be required to register and comply with stricter distribution criteria for certain regulated products. Below you’ll find an overview of the most common mandatory licenses you will require for setting up your e-commerce company:
- Business Registration License: Obtainable from the Department of Business Development (DBD) under the Ministry of Commerce.
- Tax Identification Number (TIN): Obtainable from the Revenue Department and is essential for tax compliance. If your annual revenue reaches THB 1.8 million, then you will have to register for Value Added Tax (VAT) as well.
- E-Commerce License: Required for all online businesses selling goods or services. Businesses must apply for this license within 30 days of operations
- Direct Marketing License: For businesses that involve direct marketing, this license is required. It ensures consumer protection and compliance with marketing regulations.
- FDA Registration Certificates: A legal requirement for any business that imports, produces, or distributes FDA-regulated products.
Emerhub’s local advisors can help you identify and apply for required licenses based on your business activities and needs. Our team can also manage FDA registration for your goods and assist in importing foreign-produced products for your e-commerce operations.
Regulations to Keep in Mind For Operating A Dropshipping Business
How to Import Goods From Overseas for Your Company
Import regulations are overseen by the Department of Foreign Trade (DFT) to ensure compliance with international trade agreements and proper management of import and export activities. As a dropshipping business with business activities linked to import and export, the key details for you to keep in mind are the following:
- Acquiring Import Licenses: Special permits are required for importing antiques and firearms. Additionally, an FDA license is required for food and health-related products.
- Prohibited and Restricted Products: Prohibited products include narcotics, counterfeit products, and certain wildlife. Restricted products will require specific permits from the authorities.
- Paying Duties and Taxes: Import duties and taxes may vary depending on product and country of origin due to trade agreements between countries.
Alternatively, our local experts at Emerhub can simplify the process by handling it for you. We offer an Importer of Record service and are officially licensed to legally handle the import process, thus bypassing the need for securing an import license. Our team will set up a logistics network for retrieving and shipping your products and facilitate customs clearance. This allows you to start importing anytime and offers added flexibility for short-notice imports.
Ensuring compliance with the Consumer Protection Act
This act provides a regulatory framework for safeguarding consumer rights and regulating the relationship between consumers and businesses. The Office of the Consumer Protection Board (OCPB) is responsible for enforcing this act and oversees compliance. The law covers:
- Advertising Regulations: Advertisements must not contain false or misleading statements that are harmful to consumers.
- Product Safety: All goods must meet safety standards before they can be marketed.
- Consumer Rights: Consumers have the right to safety, fair contracts, accurate and sufficient information as well as compensation for damages.
With this act, consumers can lodge complaints against your business if you fail to meet the standard obligations as outlined. This regulatory framework ensures that your business remains compliant with product safety and quality standards. This is essential to avoid potential heavy penalties from the local authorities.
Interested in establishing a dropshipping business in Thailand? Contact us by filling out the form below and we’ll get in touch.
